5 Financial Mistakes to Avoid in your 20s

5 Financial Mistakes to Avoid in your 20s

In this article, we're gonna go over five financial mistakes to avoid in your 20s. I think your 20s are just this crucial point in time. But a lot of us spend a lot of time just stuck in limbo, making the same mistakes over and over again, that are easily avoidable. I'm 47 now, and if I knew what I knew, now, looking back, I made so many mistakes that I didn't have to do, that wasted a lot of time, and money and ultimately delayed my progression.

If you're somebody younger, or you're not even in your 20s Yet, I guarantee you're gonna learn something from this article that is extremely valuable. And that's going to help you going forward to be as successful as possible, I'm going to tell you all the things that I wish I knew earlier, and looking back on what I would do differently, a lot of our mistakes are going to be financial mistakes.

And to be honest, I am not a financial advisor. I think a lot of these would be easily avoidable and save money a lot, just with a good education in our schools and education in personal finance in general. 

# 1. Mistake

Mistake number one, and I'm prepared to get a little bit of hate for this, but it's gonna be going to college for no reason. Now, hold on, let me explain. Because I went to college, I'm a registered nurse, I needed college to get my education and ultimately make the salary that I do today. But for a lot of people, they just kind of decide to go to college just to do it. 

And that is literally the worst thing you could do. You don't want to make a $100,000 financial commitment if you don't really have mathematically planned out what the outcome is. So I think this is one of the biggest mistakes that people our age can make. And that is most commonly made.

If you want to go to college, just have an end goal in mind, and have an idea of what kind of work you want to do. It's, it's okay to go to community college, it's okay to learn a trade, it's okay to not go to college and try to start a business. But just try to have a plan in mind when you're doing this and don't do something just because everybody else is doing it. 

I know when I grew up and went through high school, there was immense pressure to go to college. But nobody was helping you really figure out what to go to college for it was just like, hey, you need to go to college. If you don't know what you want to do, just go anyway, too bad, you're gonna waste a bunch of money, do a major that you don't want to do not figure it out. 

Nobody really cared about the financial implications of what if you failed in college, and if it wasn't for you. And I think that's so important. There's also nothing wrong with waiting to go to college till you know exactly what you want to do. You can be a waiter out of high school, save up a good amount of money, and then plan out. 

And eventually, you might say, oh, I want to go to college to be a doctor or go to med school or be a pharmacist. And at least you took the time to make that decision. You didn't waste a bunch of time in school when you weren't motivated or didn't have a clear goal for anyone kind of in a spot of maybe being younger and not knowing what they want to do for a career. 

Just start watching people on YouTube, that's my best recommendation, try to just see what you're interested in and see what other people are doing. Because there are so many ways you can take. And you're not going to know until you really see somebody else doing it. YouTube is such a great resource for seeing what other people are doing in their careers. 

#2. Mistake

Number two, this might not be one that everybody can relate to. But it definitely was an issue for me. And that is going to be partying too much. Yes. So even in school, I would go out drinking pretty much every weekend, it was just like the normal thing to do in my friend group.

And that definitely made school a lot harder than it needed to be looking back. I'm happy to say today, that I really don't do drugs or drink often. Like I might have a couple of drinks every once in a while. But yeah, the partying and all that it's fun at the moment, but you don't really realize the big picture, how it's impacting your success. 

And you don't realize this till you really look back and see how much harder your life was than it needed to be. Just the impact of being tired the next day and not being able to be productive. Once you cut all that stuff out of your life. You'd be amazed how much time opens up to start a business, start a side hustle, and start making more money. 

5 Money Mistakes People Make in Their 20s

And it's not just cutting out the alcohol or the drugs. It's also cutting out kind of the people that influence those decisions. You have to kind of change who you surround yourself with. That is just so crucial to making any major lifestyle change. If you want to stop any negative habit, if you're hanging around people that partake in that, or that's their whole life.

That's gonna weigh you down. And you know, my suggestion here would just be looking for a friend who's doing something productive. Maybe a friend who's starting a business, a friend who's making money doing something cool. A friend who likes exercising, start hanging out with them learning stuff from them, you're gonna learn a lot more.

And once you start taking this path you're going to kind of lose some of those relationships that you had with people in the past. And it's unfortunate, but it's just kind of a step that you really like have to take for your own growth. So yeah, the partying. And while it's fun, definitely not a good use of your time and your 20s. But by all means, have fun, but just consider moderation a little bit, and you'll probably be a lot better off. 

#3. Mistake

Mistake number three, this is going to be not doing something, it's going to be not investing in the stock market early enough. Now, I had my first experience with the stock market, when I just got out of nursing school, I got my first full-time job, and I had a pension. That's when I first started investing. 

That was when I was about 20, 24,25. So I kind of started a little bit later than I would have liked to. And looking back, if I would have just opened up a Roth IRA or been doing certain things like that, I'd be a lot better off financially. Now you have to understand that compound interest.

The younger you start, the more that snowball, the faster that snowball gets rolling and accumulate your wealth a lot quicker. Looking back, I would have started investing at 18. Or even sooner if I could have known what I know. Now, even investing small amounts of money make a huge difference. 

Even if you can only do $5 A week, just the mental effect that's going to have on you is really going to change your whole mindset and how you live your life. Having a purpose for your money and putting it to work, lets you see what you can do with it rather than just spending it on frivolous things that you don't really need.

Also, in return, this motivates you more to make more money to make that money grow. So it's just this whole positive feedback loop that really makes you a lot more wealthy early in life. And I firmly believe that if you just take a positive investing mindset and do the right things with your money, starting early in your 20s, you can be a millionaire by the time you're 30. 

#4. Mistake

Mistake number four is going to be focusing on too many skills or being a jack of all trades. In my 20s I spent a ton of time learning different hobbies, doing different jobs, and just kind of finding what I was interested in because I'm interested in so many things. 

But looking back, I kind of wish I would have taken this time to just focus and get really good at one thing if you focus on one skill and get really good at it you can be an expert and this generally provides more value and in return provides more profits for you in the book Outliers by Malcolm Gladwell.

He explains that it takes 10,000 hours to become an expert in any skill, you can definitely speed up this process by focusing on one thing and not pursuing too many hobbies and passions. Generally, the people with the highest salaries and the most opportunities are people that are really good at one individual thing. 

The 5 common credit mistakes you should avoid in your 20s

Think about coders at Google, they just got really good at coding. They got these huge tech salaries because they got really good at coding, they got really good at one thing. So yeah, you're gonna definitely increase your salary. If you get really good at one skill. Think about doctors or lawyers, it takes a ton of time and effort to pursue any of these careers.

The more in demand you are, the more value you provide to society, and the better returns are going to be for yourself. My takeaway with this is before you think about quitting something or switching to a different hobby, think about why you're quitting Do you really just not like it because if you stick with that one hobby and get really good, the odds are the return is going to be much better.

On the other side of this. I will definitely say it's good to explore young in life and try to kind of figure out what you want to do. I don't really regret being a jack of all trades, but I do wish I found my passion sooner for what I'd like to do. And sometimes even wonder if I'm going to switch again and tried some other hobby.

#5. Mistake

mistake number five and this is one I just came to realize maybe two years ago, and that's going to be not investing in real estate for most of my 20s I thought that real estate was something that like people in their 30s and 40s started to do. It wasn't even really kind of an option for me. I didn't I didn't know any young people in their 20s buying real estate.

And that's probably my own fault for hanging out with the wrong people. But now through going on YouTube and seeing what so many amazing people are doing and the real estate investments they're making with their rental properties. I just regret not getting in this game earlier.

I think for me real estate just always felt like it was out of reach or something that was too difficult. to do as a young guy in his 20s, between 19 and 25, I spent much of my time renting a room and a house with roommates. When in reality, I could have just worked my ass off when I was 18, saved up a downpayment, and then got a mortgage on a house and rented out the rooms myself.

And covered my mortgage, or probably even made a profit, I would have had the exact same living situation with a little bit more responsibility, but also a lot more cashflow, and building equity as well. Most of us in our 20s already live with roommates. So why not start building equity and starting your real estate portfolio as early as possible?

On the flip side to this something to consider, if you do lock yourself into real estate in a certain metropolitan area, you're kind of stuck there a little bit, I mean, you can always get a property manager remotely, but that's not quite as easy to manage. So being stuck in one area can be a little bit of a downside in your 20s with real estate, mainly because there are so many salary opportunities in moving. 

So you buy real estate in Iowa, and you have a really good job come up in San Francisco. Well, it's gonna be kind of hard for you to move from Iowa to San Francisco and keep your rental property unless you have a really awesome property manager or maybe you have like family in the area. 

So that's a downside with real estate, if you want to be mobile, maybe consider renting. Alright, so those are my five financial mistakes in your 20s to avoid, I'd love if some of you guys maybe you're a little older and you want to extend some wisdom to the younger generation.